6 October 2017 by Olivia French

“Groundless Threats” rebalance Intellectual Property Law

The protection of Intellectual Property rights are important to many companies as they encourage the research and innovation required to bring new products or services to market.  In simple terms, IP rights could prevent competitor companies from unfairly copying new products and launching their own same or similar product.  The competitor company, would it is argued gain an unfair advantage in the market as they have not had to invest the time in the research and development undertaken by the initial company.

These rights are broad and can include for example the issuing of an injunction against a competitor company stopping them from doing something – this may for example prevent them from selling a rival product.

Enforcing these rights where there is a suspected infringement is however extremely expensive for both parties and often disruptive as it can involve specialist courts, judges, lawyers and experts which can mean that the legal fees exceed any potential settlement.

Unscrupulous companies can and have alleged fictitious infringements of their IP rights and used the threat of legal proceedings and the associated high costs to defend a court action, as a way of intimidating often smaller companies and “stifle new ideas”.

This has turned protection of rights as something of a weapon against, for example smaller app developers, independent shops and smaller businesses, as they are forced to give in because the costs of defending are too high.

Many businesses faced with a threat therefore, may feel that the safest course is to back down and withdraw their product from sale even if the claim against them has little merit.

Groundless Threats

In a largely welcomed move designed to combat this abuse, a concept called “Groundless Threats” has been introduced and the law behind this was updated earlier this month.  It is now the case that threatening legal action (where there is no or little justification) can land a company in hot water and leave it trying to defend a claim of its own.

Put another way if a threat of legal action against infringement is made where there has been no infringement, the threat can be deemed groundless.

Any person whose commercial interests suffer because of the threat can apply for an injunction to stop the threats, a declaration that there has been no infringement and/or damages for loss caused by the threats.

The recent update however recognised and now ensures that a balance is struck between the genuine protection of IP rights and disrupting a competitors business.

Best practice

The updates make it easier to protect your IP rights, whilst also shielding genuine competitors from unjustified threats.  In this complex area it is still advisable to seek legal advice before issuing anything that could be construed as a threat as the unintentional outcome may be that it is you who is dragged into court.

If you would like more information on how this could affect you and your business, please contact Olivia French on 020 7288 4778 or by email at OliviaFrench@boltburdon.co.uk.

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